Business ownership II |
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Key term
Franchising is an agreement where one party (the franchiser) grants another party (the franchisee) the right to use its brand name and business knowledge ( as well as other business services) for initial fee and ongoing royalties.
Franchising is an agreement where one party (the franchiser) grants another party (the franchisee) the right to use its brand name and business knowledge ( as well as other business services) for initial fee and ongoing royalties.
Task 2
Watch the video opposite and write down the pros and cons of buying a franchise (i.e. becoming a franchisee rather than a business owner) Stretch & challenge: What are the pros and cons of allowing others to buy a franchise in your business? |
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Answers - buying a franchise
Pros
> Established business with proven track record > Brand loyal customers > Brand name & operational experience > Staff trained for you > All promotional activities taken care of |
Cons
> High set up cost and ongoing free (royalties) > Do not get to make own decisions > Must buy all stock / raw materials through franchise > Reputation effected by the actions of other franchises |
Task 3
Exam style case study and question
Ray has just come into a large inheritance and wants to run his own business. Despite having never worked in the industry he would like to set up his own fast food restaurant. He has calculated that the cost of setting up a new restaurant from scratch will be similar to buying a McDonald's franchise. Which would you advise? Justify your answer.
Exam style case study and question
Ray has just come into a large inheritance and wants to run his own business. Despite having never worked in the industry he would like to set up his own fast food restaurant. He has calculated that the cost of setting up a new restaurant from scratch will be similar to buying a McDonald's franchise. Which would you advise? Justify your answer.